Real Estate to See US$ 12-bn PE Funds

Hyderabad, India (PressExposure) May 26, 2008 -- With the Indian real estate market slated to grow 35-40 per cent in value terms over the next two years, private equity (PE) players are lining up significant investments in the segment. Led by Blackstone and the PE arm of Deutsche Bank, a host of players -including Red Fort Capital Advisors, Starwood Capital and Walton Street - are expected to invest close to US$ 12 billion combined in homes, offices, townships, hotels and other projects.

Red Fort Capital is preparing to invest Rs 3,500 crore, mainly on budget hotels, while Starwood is committing Rs 800 crore to Chennai-based Shriram Properties. Deutsche Bank will help Suncity Projects raise Rs 1,500 crore, and the Blackstone Group has said it would invest around US$ 18 million (around Rs 73 crore) in Synergy Property Development Services. Kuldeep Chawla, director, Red Fort Capital, said, "We will focus on developing a chain of budget hotels by associating with local developers. About 400 budget hotels with 60,000 hotel rooms are expected to come up in India. We will look at investing in a diversified portfolio of properties."

In 2006, markets regulator SEBI opened up the real estate market to PE investments. The first year was a learning period. "The following year saw a real correction in the market, with large incremental growth rather than dramatic growth, where stock market money went into special purpose vehicle-level investments," says Arun Natarajan, founder & CEO, Venture Intelligence India, which tracks the PE segment...

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